Correlation Between Wabash National and Textainer Group

Can any of the company-specific risk be diversified away by investing in both Wabash National and Textainer Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Wabash National and Textainer Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wabash National and Textainer Group Holdings, you can compare the effects of market volatilities on Wabash National and Textainer Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Wabash National with a short position of Textainer Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wabash National and Textainer Group.

Diversification Opportunities for Wabash National and Textainer Group

0.29

Correlation Coefficient

Wabash National  Textainer Group

Modest diversification

The 3 months correlation between Wabash and Textainer is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and Textainer Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textainer Group Holdings and Wabash National is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Wabash National are associated (or correlated) with Textainer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textainer Group Holdings has no effect on the direction of Wabash National i.e., Wabash National and Textainer Group go up and down completely randomly.

Pair Corralation between Wabash National and Textainer Group

Considering the 90-day investment horizon Wabash National is expected to generate 0.55 times more return on investment than Textainer Group. However, Wabash National is 1.82 times less risky than Textainer Group. It trades about -0.11 of its potential returns per unit of risk. Textainer Group Holdings is currently generating about -0.06 per unit of risk. If you would invest  1,694  in Wabash National on October 20, 2024 and sell it today you would lose (71.00) from holding Wabash National or give up 4.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Wabash National  vs.  Textainer Group Holdings

Wabash National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wabash National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Wabash National is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Textainer Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Textainer Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Wabash National and Textainer Group

The main advantage of trading using opposite Wabash National and Textainer Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wabash National position performs unexpectedly, Textainer Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Textainer Group will offset losses from the drop in Textainer Group's long position.

The idea behind Wabash National and Textainer Group Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.